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Monday, January 6, 2025
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Microsoft Corp. (MSFT), Exxon Mobil Corp. (XOM) and Amgen Inc. (AMGN), as well as two micro-cap stocks: PrimeEnergy Resources Corp. (PNRG) and FONAR Corp. (FONR). The Zacks microcap research is unique as our research content on these small and under-the-radar companies is the only research of its type in the country.
These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
You can see all of today’s research reports here >>>
Shares of Microsoft have gained +13.8% over the past year against the Zacks Computer - Software industry’s gain of +17.6%. The company is riding on robust Azure and Office 365 performance, amplified by surging AI Copilot adoption. Solid adoption of Azure AI, which now has a clientele of more than 60,000 customers holds promise.
Intelligent Cloud revenues are driven by growth in Azure and other cloud services. Productivity and Business Processes revenues continue to rise due to the strong adoption of Office 365 Commercial solutions. Continued momentum in the small and medium businesses and frontline worker offerings, as well as a rise in revenue per user, is encouraging. We expect fiscal 2025 net sales to grow 12.8% from fiscal 2024.
However, the office's declining commercial licensing due to the continued customer shift to cloud offerings is an headwind. Higher operating expenses and spending on Azure amid stiff competition in the cloud space remain concerns.
(You can read the full research report on Microsoft here >>>)
Exxon Mobil’s shares have outperformed the Zacks Oil and Gas - Integrated - International industry over the past year (+10.5% vs. +5.2%). The company’s high-value assets in the Permian Basin and Guyana drive robust production growth, doubling upstream earnings since 2019. The Pioneer acquisition and Guyana ramp-up have enhanced profitability, while $11 billion in structural savings since 2019 (targeting $15 billion by 2027) strengthen resilience.
With a low net debt-to-capital ratio, XOM supports steady cash flows, dividends, buybacks and investments in high-return projects. Expansion in low-carbon tech, including Baytown's hydrogen facility, positions it for future growth.
Yet, refining margins are pressured due to global capacity increases, with crack spreads softening. Regulatory hurdles in California and XOM’s reliance on finding recoverable reserves add risk. Commodity price volatility challenges profitability, especially as crude prices dipped in the third quarter.
(You can read the full research report on Exxon Mobil here >>>)
Shares of Amgen have underperformed the Zacks Medical - Biomedical and Genetics industry over the past six months (-14.9% vs. -5.9%). The company’s increased pricing headwinds and competitive pressure are hurting sales of many products, including some biosimilars. Weakness in some key brands like Otezla and Lumakras create potential revenue headwinds.
Nevertheless, Amgen’s old medicines like Evenity, Repatha and Prolia, as well as newer medicines like Tavneos and Tezspire, are driving sales, offsetting declining revenues from oncology biosimilars and legacy established products such as Enbrel.
The addition of Horizon products is boosting revenue growth. Amgen also has some key pipeline assets in obesity and inflammation, which have a large market opportunity. Key obesity candidate MariTide demonstrated sustainable weight loss in a phase II study.
(You can read the full research report on Amgen here >>>)
PrimeEnergy Resources’ shares have outperformed the Zacks Oil and Gas - Exploration and Production - U.S. industry over the past year (+106.4% vs. +14.0%). This microcap company with a market capitalization of $363.25 million showcases robust financial performance, with revenues surging 84% year over year to $177.27 million for the nine months ending Sept. 30, 2024, driven by higher production volumes and improved pricing.
Oil production skyrocketed 131%, natural gas 82% and NGLs 112%, reflecting strategic investments in horizontal drilling. With a low debt-to-capitalization ratio of 1.75% and long-term debt at just $3 million, PrimeEnergy maintains financial discipline while benefiting from a $115 million borrowing base.
Strategic acquisitions in West Texas and divestitures of non-core assets enhance focus on high-yield projects. Positioned to capitalize on rising global energy demand and favorable market conditions, PrimeEnergy combines operational efficiency, a strong asset base, and market alignment to deliver sustainable growth and shareholder value.
(You can read the full research report on PrimeEnergy Resources here >>>)
Shares of FONAR have underperformed the Zacks Medical - Products industry over the past year (-21.1% vs. +10.1%). This microcap company with market capitalization of $95.05 million is facing challenges which include declining net income, cash flow constraints and competitive pressures, highlighting the need for cost control and geographic diversification.
Nevertheless, FONAR's growth strategy emphasizes expanding diagnostic imaging capabilities, exemplified by adding high-field MRIs at all Florida centers, and replicating this scalable dual-modality model in high-demand Long Island facilities.
Despite a 5% year-over-year increase in MRI scans to 53,054 in first-quarter fiscal 2025, total revenues fell 3.4% to $24.9 million, owing to a 14% decline in patient fees. Operating income fell 29.9% due to rising selling, general and administrative (SG&A) expenses. Strong liquidity, with $124.7 million in working capital and a 9.6 current ratio, supports innovation, including unique STAND-UP MRI technology.
(You can read the full research report on FONAR here >>>)
Other noteworthy reports we are featuring today include Lowe's Companies, Inc. (LOW), U.S. Bancorp (USB) and HCA Healthcare, Inc. (HCA).
Mark Vickery
Senior Editor
Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>